There are basically two types of FHA insured 203K loans. While both loan types can be used for either a purchase or a refinance, they differ in a few key areas. For the financing of renovation work that exceeds $35,000, or if there are any structural repairs, the only option for borrowers is to go with the Standard 203K loan, also known as the Consultant 203K loan. The 203K streamline loan may be used for minor repairs, additions to the exterior or for the purchase of appliances, with a budget under $35,000.

Basically, if your repairs are structural in nature or they exceed the maximum amount from a Streamline 203K ($35,000) you need a 203K Consultant, period.

Not all Consultants are created equal, in fact quite a few of the ones can turn out to be flat out terrible. However, there are plenty of great ones out there. HUD Consultant selection can make or break a deal. Seriously, you choose wrong and you could just kill your loan.

This is yet another reason why using an experienced renovation loan officer is important. If they specialize in 203K loans then they have a good HUD Consultant, use that experience and save yourself some grief.

While all Consultants are not created equal, the inspection fee schedule IS! The fee is set by HUD on a fixed schedule and is based on the amount of renovation you are doing.

$ 75,001 -100,000
$100,000 and up

203K Feasibility Analysis

The first role of the Consultant is to do an initial inspection of the property. This occurs during the loan process. There are varying schools of thought on when this should be done. Most suggest that a 203K consultant be brought in prior to getting the contractor in to bid the project. Those guys are wrong.

The Consultant does not dictate the repair, they are there to ensure that everything that is required to be done is getting done and to take a 2nd look at the Contractor’s numbers to make sure they seem accurate. If you have no idea what repairs are needed to meet FHA 203K guidelines then sure, get the consultant in from the get go.

If you have a pretty good idea what is needed then bring them in AFTER the contractor has bid on the scope of work you want.

203K Post-Close Draw Inspections

This is the truly valuable part of what the 203K Consultant does. He protects YOU and ensures your renovation is how YOU want it! When you have a good one, they will come in and ensure the quality of the work, ensure that it meets FHA guidelines and make SURE YOU ARE HAPPY before they sign of on the release of the draw.

If you are not happy with the quality of the work let them know! Your loan officer can make sure the contractor corrects the issue or he won’t get paid. Remember, you (along with the Consultant) control the funds on a 203K Loan. For first-time buyers or first time renovators this piece of the renovation, and the HUD Consultant’s role in it, is vital to success.

The Consultant should also be getting Lien Waivers signed during the draw inspections. Another bit of protection for you and your renovation. This ensures all the sub contractors have been paid and protects you against mechanic’s liens that could potentially go on the property if everyone has not been compensated correctly.


Although the HUD Consultant is an added expense they really do provide VALUE and PROTECTION to you during your 203K Renovation. However, if you get the wrong one then all they provide is additional expense. That is why it is really important to heed the advice and experience of your 203K lender. A good 203K Expert will have participated in HUNDREDS of Standard 203K loans and can tell you a good Consultant from a bad one without hesitation.